March 9, 1995
Honorable Keith Oakley
Chair
House Committee on Public Safety
Texas House of Representatives
P.O. Box 2910
Austin, Texas 78768-2910
Letter Opinion No. 95-006
Re: Whether a public school district must
obtain a payment bond on a public work
contract for more than $25,000 that its
insurer makes, under authority of the
insurance contract between it and the
insurer, with the prime contractor on a
public work consisting of repairs to be
performed on damaged school district
property (ID# 31742)
Dear Representative Oakley:
You ask whether a public school district must obtain a payment bond on a public
work contract for more than $25,000 that its insurer makes, under authority of the
insurance contract between it and the insurer, with the prime contractor on a public work
consisting of repairs to be performed on damaged school district property. We quote the
following facts from your request letter:
A public school district suffered damages to one of its public
schools. There existed an insurance contract between the public
school district and the insurer which covered the loss. The insurer
assumed control over the public work to be performed on the basis
of the terms of its insurance contract with the public school district.
The public work to be performed on the public school was in excess
of $25,000.00. The public school district did not obtain a payment
bond from the insurer or any other entity which could be considered
the “prime contractor.”
No mechanic’s lien may attach to public property unless the right is expressly
conferred by statute. E.g., Atascosa County v. Angus, 18 S.W. 563 (1892). “As a matter
of public policy, mechanic’s liens are not permitted on public improvements where
payment and performance bonds are required.” City of La Porte v. Taylor, 836 S.W.2d
829, 831 (Tex. App.--Houston [1st Dist.] 1992, no writ); see Quincy Lee Co. v. Lodal &
Bain Eng’rs, Inc., 602 S.W.2d 262, 263 (Tex. 1980). Section 2253.021 of the
Government Code requires a performance bond and a payment bond on a public work
project:
(a) A governmental entity that makes a public work contract
for more than $25,000 with a prime contractor shall require the
contractor, before beginning the work, to execute to the
governmental entity a performance bond and a payment bond.
(b) The performance bond is:
(1) solely for the protection of the state or governmental
entity awarding the public work contract;
(2) in the amount of the contract; and
(3) conditioned on the faithful performance of the work in
accordance with the plans, specifications, and contract
documents.
(c) The payment bond is:
(1) solely for the protection and use of payment bond
beneficiaries who have a direct contractual relationship with the
prime contractor or a subcontractor to supply public work labor
or material; and
(2) in the amount of the contract.
Gov’t Code § 2253.021(a) - (c) (footnote added).
The purpose of the requirement of a payment bond on a public work project is to
protect subcontractors who supply labor and materials to the public work.
JOE F. CANTERBURY, JR., TEXAS CONSTRUCTION LAW MANUAL § 3.15, at 123 (1992).
Section 2253.027 of the Government Code sets forth the consequences the governmental
entity may suffer if it fails to obtain a payment bond as required by section 2253.021:
If a governmental entity fails to obtain from a prime contractor
a payment bond as required by Section 2253.021:
(1) the entity is subject to the same liability that a surety
would have if the surety had issued a payment bond and if the
entity had obtained the bond; and
(2) a payment bond beneficiary is entitled to a lien on
money due to the prime contractor in the same manner and to
the same extent as if the public work contract were subject to
Subchapter J, Chapter 53, Property Code. [Footnote omitted.]
We understand the issue you raise to be whether section 2253.021 applies to a
public work contract made by the insurer of a governmental entity rather than by the
governmental entity in its own name. The situation you describe, however, shows that
the insurance company has contractual authority to act as the agent of the school district
in making the repairs. “It is a general rule that the act of an agent is the act of his
principal, which is expressed in the maxim: ‘Qui facit per alium, facit per se.’” Baldwin
v. Polti, 101 S.W. 543, 544 (Tex. Civ. App. 1907, writ ref’d). Therefore, we believe that
the contract of the insurer in the facts you provide is, in the eyes of the law, the contract
of the public school district and that section 2253.021 applies expressly. We accordingly
conclude that a public school district must obtain a payment bond on a public work
contract for more than $25,000 that its insurer makes, under authority of the insurance
contract between it and the insurer, with the prime contractor on a public work consisting
of repairs to be performed on damaged school district property.
S U M M A R Y
A public school district must obtain a payment bond on a public
work contract for more than $25,000 that its insurer makes, under
authority of the insurance contract between it and the insurer, with
the prime contractor on a public work consisting of repairs to be
performed on damaged school district property.
Yours very truly,
James B. Pinson
Assistant Attorney General
Opinion Committee
During the same legislative session that recodified former V.T.C.S. article 5160, sections A and
C, as section 2253.021 of the Government Code, the legislature also amended section A of former article
5160 without reference to the repeal of the article by section 46 of chapter 268 of the Acts of the
Seventy-third Legislature, Regular Session. As so amended, section A provides that the maximum size
of a prime contract on which a performance bond is not required is $100,000 (it was formerly $25,000).
The amendment of section A is preserved as part of section 2253.021, the code provision that revised
section A. See Gov’t Code § 311.031(c).
(footnote continued)
Honorable Keith Oakley - Page 3 (LO95-006)
Honorable Keith Oakley - Page 3
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